Gold prices rose on Wednesday as concerns about inflation kept some investors on edge, while expectations that rising prices may prompt central banks to increase interest rates strengthened the dollar and capped bullion’s advance.
Spot gold rose 0.5% to $1,859.49 per ounce by 1100 GMT. U.S. gold futures gained 0.5% to $1,862.60.
“Investors are afraid of inflation going out of control and (are) therefore buying gold to hedge against that risk,” said Carlo Alberto De Casa, external analyst at Kinesis Money.
Rate increases remain a potential risk for gold and only a clear break above $1,875 may drive further gains, De Casa added.
Higher interest rates increase the opportunity cost of holding non-interest bearing gold.